Sprint Remains in Antitrust Suit Against AT&T/T-Mobile Merger

By Josh Long

Sprint Nextel Corp. and the wireless company formerly known as Cellular South  C Spire Wireless  remain obstacles to AT&T’s $39 billion acquisition of T-Mobile USA.

A federal judge on Wednesday allowed the U.S. wireless carriers to remain plaintiffs in lawsuits filed against the controversial merger.

Overland Park, Kan.-based Sprint and Ridgeland, Miss.-based C Spire have been permitted to pursue their claims related to the acquisition’s effects on the market for mobile wireless devices. U.S. District Judge Ellen Huvelle also allowed C Spire to pursue its roaming claims.

However, most of the plaintiffs’ claims were dismissed, including allegations that the combination between AT&T and T-Mobile USA would lead to possible price increases for consumers or coordination among competitors. Essentially, Huvelle found that Sprint and C Spire Wireless didn’t have the right or so-called “standing” to bring the claims that the U.S. Department of Justice has pursued in a separate antitrust suit against the merger. All the cases are pending in the U.S. District Court for the District of Columbia.

We are pleased with the ruling that dismisses the vast majority of the claims of Sprint and CellSouth,” Wayne Watts, AT&T senior executive VP and general counsel, said in a statement released Wednesday. “We believe the limited, minor claims they have left are entirely without merit.”

Responding to the ruling in a statement Wednesday, Susan Z. Haller, Sprint’s vice president-litigation, said “the Court has ensured we receive a fair hearing.”

“Along with the Justice Department and a bi-partisan group of Attorneys General from seven states and Puerto Rico, Sprint has concluded that the transaction would give AT&T the ability to raise prices, thwart competition, stymie innovation, diminish service quality and stifle choice for millions of American consumers,” Haller said. “We are pleased that the Court has given us the chance to continue fighting to preserve competition on behalf of consumers and the wireless industry.”

Christopher King, an analyst with Stifel Nicolaus, wrote in a research note it’s possible that Sprint and C Spire Wireless could still prevail in court and block the AT&T/T-Mobile merger even if the Department of Justice and the state attorneys general who joined the suit lose their case or settle the matter. But he said that’s “very unlikely.” King said his firm views the court’s ruling as “limited in what it says about the judge’s disposition on the central question of whether the planned merger violates antitrust law.”

“We nevertheless believe AT&T/T-Mo faces an uphill battle to overcome government opposition, and we remain skeptical of a settlement, with the FCC’s review an added complication,” the analyst wrote.

The merger between AT&T (3Q results: 100.7 million customers) and T-Mobile USA  the nation’s fourth-largest wireless provider with 33.6 million customers based on second-quarter results  would make AT&T the largest U.S. wireless provider, surpassing Verizon Wireless (3Q results: 107.7 million connections) and extending its lead over Sprint Nextel (3Q results: 53.5 million customers).    

Over the summer, the Department of Justice moved to block the deal after finding that the merger would result in higher prices, fewer choices and lower quality products for American consumers.  

Dallas-based AT&T has vowed to battle the DOJ in court, although national media have reported that the telecommunications giant is pursuing a potential sale of wireless assets in order to allay antitrust concerns and reach a settlement that would salvage the merger.